asked the Minister for Industry and Commerce why he has agreed to an increase in the motor insurance rates.
52.
Ceisteanna—Questions. Oral Answers. - Motor Insurance.
51.
asked the Minister for Industry and Commerce if he will outline the basis on which he gave approval for the increase in motor insurance premiums.
53.
asked the Minister for Industry and Commerce the basis on which he sanctioned the increase in motor insurance; the date of the application submitted; why he did not set up a prices advisory body to investigate and report on this application; if he will now do so as a matter of urgency; and if he will set up a committee of inquiry into motor insurance generally.
54.
asked the Minister for Industry and Commerce if his attention has been drawn to reports stating that motor insurance premiums are to be increased; and if he will make a statement on the matter.
55.
(Cavan) asked the Minister for Industry and Commerce if he is aware that it has become increasingly more difficult to obtain motor vehicle insurance on reasonable terms; and if, having regard to the fact that such insurance is statutorily compulsory, he will take steps to ensure that it is available to those entitled on reasonable terms.
56.
asked the Minister for Industry and Commerce why he sanctioned the increase of 17½ per cent in motor insurance that will take place on June 1st next; whether he is aware of the adverse and serious effects this increase will have on industries and business throughout the country; and what proposals he has to alleviate this situation.
57.
asked the Minister for Industry and Commerce whether before agreeing to the latest increase in car insurance he considered whether changes in the structure of the companies involved could yield savings which would reduce costs to the public; and, if not, if he will now consider this matter.
58.
asked the Minister for Industry and Commerce whether, in view of the persistent failure of the insurance companies to absorb their alleged losses on the motor side of the business in the other very profitable branches of the industry, he will examine the possibility of establishing a public owned insurance corporation in a monopoly position in regard to all insurance business in the Republic.
59.
asked the Minister for Industry and Commerce if his attention has been drawn to the statement of the Chairman of the Federation of Insurance Brokers that there is a loading system for insurance policies against motorists in Cork, Galway and Dublin; and if he will make a statement on the matter.
60.
asked the Minister for Industry and Commerce if he has considered what effect the recent increase in motor car insurance and restrictions on new applicants and applications for renewal of cover will have on motor car sales and unemployment in the industry; and what steps he intends taking to counter such effects.
61.
asked the Minister for Industry and Commerce whether he is aware that a prior condition is attached to the operation of insurance companies in New Zealand that they provide third party motor insurance cover and road licence at a flat rate of £7 10s; and whether he will consult with the New Zealand authorities with a view to ascertaining whether a similar scheme could be instituted in Ireland.
62.
asked the Minister for Industry and Commerce whether he is aware that three insurance companies have stated that they will not take on any new applicants for motor insurance nor renew the insurance of motorists who have had accidents, and that the other companies have agreed not to take any of the existing clients of the three companies; and what steps he intends to take to ensure that the insurance required by law is available to all motorists.
63.
asked the Minister for Industry and Commerce if he proposes to hold a public inquiry into the increase in motor insurance which he has recently approved; if he will introduce amending legislation to the 1936 Act in relation to motor insurance; and if, in view of the fact that this country has the world's dearest motoring and in view of the widespread protests at the new increase, he will reconsider the whole matter.
With your permission, a Cheann Comhairle, I propose to take Questions Nos. 51 to 63 together.
I appreciate the concern of Deputies at the size of the increase which it has been necessary to permit in motor insurance premiums, and I can assure them that it was only after careful examination that I reluctantly concluded that an increase of this magnitude was unavoidable. When figures for the year 1969 became available some time ago, they indicated a worsening of the claims experience of companies and it became clear that a very substantial increase would have to be permitted. In deciding what increase I should permit, I did, of course, allow for profits on other branches of the companies' business—but it is completely wrong to suggest, as one Deputy does, that there were fat cheques elsewhere from which losses on motor business could be met. I also made some allowance for income on the companies' investments, although they pointed out that as they had made heavy losses on motor business for a number of years, it was not possible to attribute a large part of their investments to this branch of business. Again, I disallowed part of their application because I was not satisfied with the extent of the cost savings which have been made in recent years. In this connection, however, I should point out that the cost ratio has, in fact, been reduced for some years past, that it would take some time to effect substantial further savings and that meanwhile it would not be possible to expect the companies to go on losing money at the rate they had been doing. After careful consideration of these and other factors, I reached the conclusion that an increase of 17½ per cent would have to be permitted. I shall keep a special eye on the claims experience of the companies, and, if it should show a significant improvement from the levels of 1969, I will reduce the rates of premium permitted.
It is true, as some of the Deputies' questions imply, that it has become increasingly difficult in some cases to obtain insurance cover for cars and motorcycles. This difficulty stemmed principally from the fact that with increasing claims the rates of premium had ceased to be economic for the companies, and I expect that with the new rates, cases of difficulty in securing cover should be rare. For such cases, as Deputies are aware, there is special machinery under the auspices of the Minister for Local Government, for dealing with individual cases of drivers regarded as bad risks who find cover at reasonable rates hard to get.
My predecessor announced last November that he was considering having an examination made of the Irish insurance industry and he subsequently indicated that he was specifically concerned about certain aspects of motor insurance. I have, in fact, decided to set up a representative committee to review the field of insurance, with wide-ranging terms of reference which will enable the committee to consider, as they think fit, the various matters which I have mentioned, as well as other issues of a more general character such as have been raised by Deputies in these questions. I expect to be in a position to announce the composition and terms of reference of the committee shortly.
In conclusion, I should say in reply to a number of specific points included in the questions, that application for an increase was made on behalf of the majority of the companies on the 7th November, 1969; that the application was not referred to a prices advisory board because insurance is outside the scope of the Prices Act; and that I have no reason to anticipate that the increase in premiums will have appreciable adverse effects on car sales.
Is the Minister aware that certain companies in Dublin have refused to accept any new applicants for motor insurance while other companies have agreed not to accept transfers from these companies? What is the position regarding applicants endeavouring to obtain motor insurance? It is a constitutional requirement that all motorists must have third party insurance but this is not available to them now.
I am aware that one insurance company did announce its intention not to renew its existing motor policies—this is what the Deputy is referring to—but I have been given to understand that the chairman of the Accident Officers Association indicated in a public statement on 22nd May last that it is not true that other companies are not willing to cover an applicant who was refused by a particular company. As I have indicated in my reply, arising from the sanctioning of the 17½ per cent increase I do not think it will be possible for any motorists to get car insurance.
Surely an insurance company is under a compulsion to offer a quotation to an applicant?
It is one thing to quote but it is another thing to cover a person in the event of an accident.
Is there a statutory obligation on insurance companies to make a quotation?
What percentage of the insurance business in this country is transacted by British insurance companies?
I do not have that figure.
Eighty per cent.
As I have said in my reply as a result of the present situation I have decided to set up an investigation into the operations of insurance companies.
Can we have an inquiry into the costs?
Following his sanctioning of a 17½ per cent increase why should the Minister now set up a representative committee of inquiry? Surely the Minister is fully aware that 80 per cent of motor insurance in this country is in the monopoly control of three or four major British motor insurance groups? These groups are in intense competition for motor insurance in Britain and they do not appear to incur the same losses there. Yet the Minister accepts fully the data—which I regard as fraudulent substantiation— given him of alleged motor losses in the Republic? Quite frankly, I think the Minister has been taken for a ride in an uninsured and decrepit motor vehicle.
(Cavan): Is the Minister aware that the proposed increases in premiums would be no more than minimum premiums and that in very many cases much higher premiums are demanded by insurance companies? Furthermore, these insurance companies exclude everything that can be excluded under the Act; they are giving the minimum cover for the maximum rate. It had become almost impossible—as I said in the question which I put down before the increases were announced—to get cover at reasonable terms before these increases were sanctioned. Having regard to the fact that insurance is compulsory, does the Minister not consider it his duty to take drastic steps to ensure that cover is provided at reasonable terms?
Will the Minister say if he will include in the terms of reference of this committee the question of having State insurance for motorists? Is the Minister aware that uninsured motoring is on the increase because many insurance companies make it impossible to insure certain types of vehicles and drivers, particularly children under 30? According to insurance companies one is not an adult until one has reached the age of 30?
(Interruptions.)
Will the Minister answer the question which I put to him earlier: is there a statutory obligation on insurance companies to make a quotation?
I am not positive about that. I do not think so. I shall check up and convey a reply to the Deputy. In reply to the varied collection of supplementaries which Deputies have asked I think my decision to set up a committee, with wide ranging terms of reference, to investigate the various matters and issues which have arisen is an indication of the fact that I am not satisfied with the present position.
Will those terms of reference include power to investigate the recent increases?
Not specifically to investigate the recent increases, but there would be nothing to stop me from taking steps to reduce the increase which I have now sanctioned.
A Deputy
Very unlikely.
I was conscious as Deputy Tully and Deputy Byrne have pointed out of a growing number of people not being able to get insurance. The insurance companies claim that they cannot cover people because of the losses they are incurring. This was why I sanctioned the 17½ per cent increase.
(Interruptions.)
May we have details of all the losses incurred by insurance companies in all areas not just on motor insurance?
In these islands and not just in Ireland.
I cannot do that.
The figures are available publicly.
Can the Minister supply the figures?
I do not think it is necessary for me to supply those figures to the House.
The insurance companies are losing money but the individuals in the insurance companies are still doing all right.
The majority of people who have the misfortune to meet with an accident and consequently have to make a claim against an insurance company are more than anxious that such claims should be dealt with amicably if possible. Most people do not want to have recourse to the law courts thereby incurring costly legal and medical expenses. Will the Minister, therefore, say to the insurance companies, the legal profession and the medical profession that it is time to lay off and give over collecting the fat cheques that arise when a person has the misfortune to meet with an accident? Is not that the cause of the reduced profits of the insurance companies?
We cannot discuss the whole question——
That is a supplementary question, Sir.
I am calling Question No. 64. Would Deputy Murphy allow the Minister to reply?
May I ask the Minister how long it will take for this committee to make a report?
I do not know.
Will it take a year?
The remaining questions will appear on tomorrow's Order Paper.
May I put one final question?
Will the Deputy guarantee that it is final?
I will make it final. In the event of anybody being offered an increase of 25 per cent, 30 per cent or 40 per cent for the renewal of a premium, will the Minister approach such companies and direct them not to increase premiums to that extent? It is away above 17½ per cent and the Minister well knows that.
If I became aware of increases over and above the amount I have sanctioned I would certainly feel fully entitled to take the matter up with the insurance companies. In reply to the supplementary question asking how long it will take before the committee reports, it would, I think, take a heck of a long time if all the matters the Deputies on the other side want to have reviewed had to be reported on. As of now, my idea is that I want a committee with pretty wide terms of reference and with emphasis on endeavouring to get an initial report with regard to motor insurance.
The remaining questions will appear on tomorrow's Order Paper.